Do you want to increase your income every year? Who doesn’t? Instead of counting on a raise from your job, you can get a raise year after year by putting it in your own hands. Here’s how.
Invest in dividend stocks consistently
You can invest in any “safe” income-producing vehicles consistently to get an ever increasing income. Such vehicles include real estate, farms, and dividend stocks.
In this article, we’ll focus on dividend stocks. By consistently, I mean that you invest every month, quarter, or year. Get this. By buying safe dividend stocks over time, your income can only increase.
The goal is to make it a habit of saving a portion of your salary and invest it for income. For example, if it costs you $10 to buy or sell shares, you might decide to save $1,000 before investing, which will cost you 1% in trading fees. If you want lower fees, save up more before you invest.
What makes a safe stock?
Before the dividend of a stock is safe, it must be a safe stock. Long-term investors should look for quality stocks, which have strong balance sheets, competitive advantages against its peers, and a history of profitability.
Amgen, Inc. (NASDAQ:AMGN) has a high S&P credit rating of A and a reasonable debt-to-cap of 46%. Morningstar assigns the biotech company a wide economic moat rating, indicating it has strong competitive advantages.
Another trait that showcases Amgen’s quality is its long-term earnings-per-share (EPS) growth chart; it has simply become more profitable every year.
Long-term earnings-per-share growth
To reduce risk and improve returns, investors should never overpay for a company — even for high-quality companies, such as Amgen. Now that the shares have dipped to about $147 per share (a price-to-earnings ratio of 12.9), it’s a good time to buy it at a discount.
What makes a safe dividend?
Amgen’s track record of growing earnings, sustainable payout ratio of 35%, and management’s commitment to its growing dividend all play a role in strengthening the safety of its dividend. Here’s more detail on how to find safe dividends for your income portfolio.
When you build a portfolio of quality stocks that pay safe, growing dividends, you pretty much guarantee an annual raise for yourself! But don’t forget to buy stocks at attractive valuations to reduce your risk and maximize your gains.
If you like what you've just read, consider subscribing via the "Subscribe Here" form at the top right so that you will receive an email notification when I publish a new article.Disclosure: At the time of writing, the author owns shares in Amgen.
Disclaimer: I am not a certified financial advisor. This article is for educational purposes, so consult a financial advisor and or tax professional if necessary before making any investment decisions.
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